The following persons can also make a valid pledge

ADVERTISEMENTS:

As a rule, pledge can be made only by the owner of the goods. But there are certain exceptions to this general rule. Hence the following persons can also make a valid pledge:

1. Mercantile agent:

According to the Sale of Goods Act, 1930, “Mercantile agent means a mercantile agent having in the customary course of business as such agent authority either to sell goods, or to consign goods for the purpose of sale, or to raise money on the security of goods.”

ADVERTISEMENTS:

A mercantile agent, who is in possession of the goods or documents of title of goods with the consent of the owner, can make a valid pledge of the goods while acting as a mercantile agent in the ordinary course of the business. The pledge will be valid even if the agent has no authority to pledge the goods provided that the pawnee acts in goods faith and has no notice, at the time of pledge, that the pawnor has no authority to pledge (Sec. 178).

2. Pledge by persons in possession of goods under a voidable contract:

A person who is in possession of goods under a voidable contract can make a valid pledge of the goods, if at the time of pledge the contract was not rescinded. The pawnee will get a good title to the goods provided he acts in good faith and without notice of the pawnor’s defect of title (Sec. 178A).

Example:

ADVERTISEMENTS:

A, by fraud, induced B to sell goods. A pledged these goods with C who acted in good faith and has no knowledge of the fraud. The pledge is valid.

3. Pledge by a person having only a limited interest:

Where a person has limited interest, he can make a valid pledge to the extent of that interest (Sec. 179).

Example:

ADVERTISEMENTS:

A finds B’s transistor on the road. In spite of making reasonable search, A could not find the true owner. A spent Rs. 20 on its repair and pledged it for Rs. 100 with C. B can get the transistor only on paying Rs. 20 (Sec. 179).

4. Pledge by a co-owner in possession:

In case one of the joint owners is in possession of the goods with the consent of the others, he can make valid pledge.

5. Pledge by seller in possession of goods after sale:

ADVERTISEMENTS:

Very often A after purchasing the goods, leaves the goods with the seller. In such a case, the seller can make a valid pledge provided the pawnee acts in goods faith and without knowledge of the pawnor’s defect of title.

6. Pledge by buyer in possession of goods before sale:

Sometimes, a buyer may obtain possession of the goods with the consent of the seller before sale. In such a case also, a valid pledge can be created by the prospective buyer provided the pawnee acts in good faith and has no knowledge of the pawnor’s defect of title.

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